Problem #1 Understanding the Spectrum of the Financial Impact

I’ll try to keep this one short. Regardless of what type of studio you have, sub 2500 sq ft, 2500 -7500 sq ft or +7500 sq ft, Mostly private, mostly group, social, competitive, OR for professional teachers- Your business is going to go down. Let’s try to define the situation first before we throw out a bunch of solutions.

Example 1.

Let’s say you only teach rich students. You may be all right, but let’s look at your base. If I own a stack of apartment buildings, more than 1/2 of my tenants will fall months behind. If I am in the stock market which is tied to to every concieveable type of business I may have been wiped out, suffered catastrophic losses (people with Oil Futures ended up being wiped out and OWING tens of thousands) or making huge gains (If I have stock in Clorox, Swabs , or masks). In other words rich folks get wounded and bleed too. How many students who take 2-3 lessons a week could you afford to lose.

Working at AMI many years ago I could not understand how everyday people could afford $thousand dollar packages. In good times they can. One of my former LA students who runs a very successful restaurant trains 7 days a week. She made a very insightful comment. “Dancing is a luxury for me. I could afford it but it will be easily six months before I can consider going back to that level of privates”.

Regardless of your opinion of the effectiveness of the quarantine, many people were not earning from early March until early May (as of this writing). Removing a $5,000 monthly income (totally made up number) for 2 months (yet still having to pay bills) means you might be $10,000 in debt now. Think of owing that to a credit card company. At 18% interest you will need 165 MONTHS of $400/month to pay that off.  AT 24 % it would take 205 MONTHS! Even if the loan is interest free, you would need 105 months at $400 to catch up. Typically someone taking 1 private a week is spending $400/month.

So if your student says “I’ll be back after I catch up”, doubtful you’ll still be there when they do.

For teachers who think that’s ok I can still get by, ponder this. There will be fewer competitions. That’s another topic. Some studios will be closing, So you’ll be driving farther, and sharing space with more teachers. If you lose even 4 students, that typically $400 per week is your drop top Mercedes payment.

How about the floor rent based studios? One teacher losing 4 lessons a week doesn’t sound like much initially, If there are 10 teachers each losing 4 lessons a week. The studio will be down 160 floor fees per month, that’s $2400 at a typical $15/lesson. If they lose 1/4 of their group classes, viability becomes the main issue.

For a studio that hires teachers can you endure the loss of 1/4 of your gross income and still ride out 18, 24 months?  If so you are lucky.

Now let’s look at your clients. I’ll oversimplify

Are they rich? Typically they are old. Yes they live to dance but they don’t want to die BECAUSE they dance. Even if you lost no one in this upper age group, there is going to be a heightened sense of fear for some of them, maybe a sizable portion.

Are they upper class? They may have been living the carefree, let’s have fun mentality. This bucket of ice water will make them focus more on future, stability, more important (for them) things in life.

Are they middle class? Assuming they still have their jobs and can resume their edge of the cliff existence, they will still need entertainment, diversion, socialization. Will they take as many privates? Definitely not. But will they support you? If you can create a family quality to your studio experience, they will stand behind you.

Are they struggling artists, students, single parents, minimum wage folk? Did they get through the quarantine with a roof over their heads, a vehicle to drive, and a steady job? They’ll be back and if you can provide a low cost option (social dances, reasonable class prices, value) the masses can make up for the loss of the few at the top. 

The posts following this should specifically address problems that I have not addressed, or solutions that you may propose along the financial aspect:

Loan programs, Financing, Grants, Negotiating tactics with Landlords, etc.